Property experts are predicting a boost for the Spanish property market with the country’s new residency investment visa set to attract a lot of buyers from outside the European Union.
The long anticipated legislation granting non-EU nationals automatic Spanish residency via property investments has now officially been made law after being published in the state Gazette (BOE), opening the door to thousands of potential investors spending a minimum of €500,000.
Whereas traditional buyers have been the British, Dutch and Germans, this could change with estate agents reporting a rise in interest from buyers from the Middle East, Russia and China. They nationalities have already been snapping up properties in anticipation of the new law which is retrospective allowing those who have already bought to benefit from the residency rights which allow them to stay in Spain for 12 months compared with the current 90 days and a further residency permit that is renewable every two years.
Barcelona based Lucas Fox expect to see a boost in sales activity especially in popular areas along the Mediterranean coast.
‘We welcome the fact that the new residency investment visa has been approved by parliament and become law with no amendments to the original proposal. We anticipate that the new law will have a very positive effect on the Spanish property market, increasing the number of transactions and gradually leading to more new property developments specifically targeted at residency investors,’ said Lucas Fox co-founder Alexander Vaughan.
Lucas Fox has established a new company called Residency in Spain to deal with the demand from real estate investors and has registered as many as 30 enquiries a day from non-EU potential buyers, particularly from China and India.
‘The interest surrounding the anticipated approval of this new legislation has already generated a huge amount of interest in China and India, but we have also received many enquiries from potential buyers from South Africa, Brazil and the Middle East. I believe these savvy buyers will eventually help to stimulate the market in the areas of Spain where the quality of property available is high, and in turn encourage developers to tailor new developments with these overseas buyers specifically in mind,’ explained Lucas Fox head of business development Jason Ham.
Taylor Wimpey España has seen how the nationalities of potential buyers have changed in anticipation of the new visa. ‘For the past 50 years, we at Taylor Wimpey España have primarily been selling high quality second homes across Spain to Europeans with the British, Germans and Scandinavians the biggest buyers. Things are changing though and fast. Over the last year we have sold properties to buyers from Saudi Arabia, Kuwait and Jordan as well as Morocco in North Africa,’ said sales and marketing manager Marc Pritchard.
He has found that in terms of location, by far the most sought after area is the Costa del Sol. Known globally as a European hotspot for glitz and glamour, it’s still the place to be seen for many and has become a real magnate for savvy Middle Eastern investors.
‘The resort town of Marbella in particular, has always operated on a different plane to the rest of Spain. From the exclusive nightclubs of Puerto Banús to the Saudi Royal Family’s replica of the White House, wealthy Middle Eastern investors have been melding Marbella in their own image for years,’ he explained.
‘The sale of Spanish properties to Middle Eastern buyers who are able to obtain residency could bring in untold additional revenue to the country. Our neighbours in Portugal have seen a genuine lift in the property market thanks to the government initiative and we expect areas like Marbella, ideal for high end buyers, to profit from the added migration,’ he added.
But not all parts of Spain will benefit. For example Chris Mercer, director of Murcia based Mercers, said that while the new visa is excellent news, in his neck of the woods it would have been better if the threshold was lower at a more reasonable €250,000 to €350,000 to throw it open to more potential investors.
‘Nonetheless I think it has to be a positive move and will encourage inward investment, especially while prices are so attractive. However at Mercers we certainly don’t have many homes to offer as average prices are much lower than €500,000 in this part of Spain. It’s unlikely therefore to affect us,’ he pointed out.
Daniel Chavarria Waschke, managing director of Mallorca and Ibiza Sotheby’s International Realty, is not sure what impact it will have on the Balearic Islands. ‘In Mallorca and Ibiza we do not have too many buyers from outside the EU and I would be surprised if, as a result of the new law, we suddenly start attracting many customers beyond our usual target audience,’ he said.
‘However, the €500,000 threshold does completely suit our clientele as it is company policy in Mallorca to exclusively market villas priced above €2 million and apartments above €1 million, whilst in Ibiza the bar is set at villas above €1.5 million and apartments above €500,000. Therefore our entire portfolio meets the criteria set down for the visa scheme,’ he explained.
The visa is set to boost the prime property market in Spain according to Knight Frank. Its latest residential insight report says that prime markets are on a firmer footing with some more affluent second home hotspots reporting price growth for the first time since the onset of the global financial crisis.
According to the Knight Frank report Mallorca, Ibiza and Barcelona are leading the way and it is hoped that investors from Asia and the Middle East in particular will shore up some of Spain’s more oversupplied markets as a result of the investor visa.
‘The outlook for Spain’s luxury housing market is improving. Both the volume of enquiries and agreed sales have increased in the first half of 2013. Spain’s prime markets are attracting a broader range of international buyers who have the confidence and finance in place to purchase. Buyers previously looking in neighbouring European countries are seeing value in Spain and in particular the Balearics once more,’ the report says.
The report also reveals that Madrid is increasingly on the radar of international buyers with interest from buyers in the United States, Mexico, Colombia and Venezuela. Knight Frank’s associate office in Barcelona recorded more sales in the first half of 2013 than in the whole of 2012.
Mallorca‘s recovery is also evident across most price bands but particularly below €600,000 and above €2 million and Dutch and Belgian buyers are increasingly active in the prime Ibiza market. Sales in Marbella rose 21% in 2012 year on year and there has also been interest from French buyers as a result of French President Francois Hollande’s policy on wealth tax.
The report points out that Sotogrande remains a firm favourite with Madrid’s wealthy and Gibraltar’s business community. Popular areas include Sorogrande Costa, the Kings and Queens area and large plots close to the Almenara Golf Course.
